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Liberty says it is not using Discovery brand unlawfully

Describes the case as ‘ill-conceived’ and intended to scare off competition.

Discovery is taking financial services group Liberty to court for trademark infringement and unlawful competition for using its Vitality incentive programme brand, but Liberty says it has no case. 

The largest health insurance administrator in the country has filed papers in the Johannesburg High Court where it is looking to interdict Liberty after it launched a ‘wellness bonus’ benefit that gives customers a certain portion of their premiums back in cash if they are part of external wellness programmes, such as Discovery Vitality or Momentum Multiply. 

In court papers seen by Moneyweb, Discovery wants to stop Liberty from using the Discovery and Vitality trademarks and says the company is “competing unlawfully” with it.

Liberty has dismissed Discovery’s claims of trademark infringement and unlawful competition and is accusing Discovery of attempting to “stifle legitimate competition” in the market, especially in relation to life insurance company Discovery Life. 

The wellness bonus benefit was introduced in May 2019 as an additional feature of the Liberty Lifestyle Protector insurance policy.

Instead of starting its own wellness programme, Liberty opted to use the health status data of consumers on either Vitality or Multiply. 

The data is used to determine the percentage of qualifying premiums that a Liberty insurance customer can accrue and receive a cash-back payment on.

No infringement

Liberty is arguing that using the words Vitality or Multiply does not constitute trademark infringement because it is only using them for “descriptive” purposes to ensure that customers are aware of the qualifying wellness programmes that are recognised by Liberty. 

“It is not obvious how else one would identify the wellness programme offered by the applicant except by calling it Discovery Vitality, or just Vitality,” Liberty’s managing executive David Jewell states in court papers. 

Liberty says that had it used the words Discovery or Vitality as a trademark in order to create an impression that there is a commercial and material link between its wellness bonus programme and Vitality, that would constitute an infringement, but this does not exist.

In the papers, Jewell states that Liberty has its own brand and a reputation that spans over 60 years, and thus has “no need or desire” to be linked to Discovery. 

Using soft drink manufacturer Coca-Cola as an example, Jewell explained that if a person used the words “coke” to refer to the popular cola-flavoured, sugary, carbonated drink it is merely to identify the product “rather than so as to suggest that they are the proprietor of the Coke trademark or connected in the course of trade with the proprietor of that trademark”. 

“Such use is not objectionable, for obvious reasons,” says Jewell. 

No unlawful competition

On the charge of unlawful competition, Liberty claims there is no basis in law for Discovery’s claim. 

Jewell says that it is not in competition with holding company Discovery Limited, which does not trade, nor does it compete with Vitality because it does not offer its own wellness programme. 

“Liberty cannot, in these circumstances compete ‘unlawfully’ with either of these companies for the simple reason that it does not compete with them at all,” Jewell charges.

Jewell accuses Discovery of launching the legal challenge as a “scare tactic” to eliminate competition with Discovery Life by “any means possible”. 

Discovery Life and Liberty both use a customer’s health status on Vitality to determine the extent to which their customers are entitled to cash-back benefits on their various policies. Therefore, in terms of competition, the two are on a level playing field and no claim of unlawful competition can be found, according to Liberty.

Momentum has not challenged Liberty on the use of its data or brand, despite not having an agreement in place. Liberty believes this strengthens its case. 

In an emailed statement Momentum’s Multiply executive head Johan Kleu said it had no intention of pursuing legal action against Liberty but that it would continue to “monitor” the developments.

Kleu said the introduction of the wellness bonus indicates that Liberty sees value in a programme such as Momentum Multiply.

Innovate, don’t piggyback

Speaking to Moneyweb, Discovery Life CEO Hylton Kallner said they do not have an issue with competition and in fact welcome it, as long as it is rooted in “innovation”. 

In 2016 Liberty discontinued its wellness rewards programme called Own Your Life. At the time the company said that while this was supposed to be a value-added product, the market had become saturated and rewards were “fast losing their value as a point of differentiation.”

Kallner said rather than rebuilding and investing in their own product to compete again, Liberty chose to use the intellectual property that has been built by Discovery Life and Vitality. 

On top of that, he added, Liberty did not approach it to seek permission to use the Vitality status.

Vitality is partnered with other international insurers who use the Vitality status, but Kallner said they would not share the data that Discovery has developed for two decades with a third party that is their direct competitor. 

“I think that is the reason why they didn’t approach us in the first place,” he said. 

Kallner said that while Discovery does not have a problem with its customers sharing their Vitality status, Liberty has created a product that solicits this information and is trying to sell life insurance using that as an incentive – which is unlawful. 

Kallner said that while he can’t speak for Momentum, Multiply was not being used to the same extent as Vitality in the wellness bonus programme. Consumers are entitled to greater bonuses based on their Vitality status. He said this indicates that Liberty is aware that Vitality has more prominence and Discovery Life has a larger market share. 

Vitality member status 

Liberty says there is nothing wrong with them using consumers’ Vitality status to determine its wellness scores because their status does not qualify as intellectual property.

Liberty further argues that the status does not belong to Discovery but to the member, who can choose to disclose it to them or any other party. 

Liberty says a Vitality status is much like the results of a medical examination or test done by a qualified doctor. 

In this analogy, a patient pays for a medical examination in exchange for the results and more information about their health. Liberty says Discovery Vitality is in a similar position to a medical doctor. 

“The doctor that undertook the examination cannot, for example, prevent the patient [from] disclosing the results of the medical examination to a life insurance company for purposes of reducing the policyholder’s premiums,” said Jewell.

Further, he says Vitality members are not being forced to disclose their status but do so voluntarily, and that there is nothing unlawful about Liberty using the information that is not confidential or owned by Discovery.

Liberty encourages healthy living with new scheme

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Shows desperation on the part of Liberty whose traditional business model is out of date. Rather than coming up with their own innovations they are copying someone else’s. Doesn’t inspire confidence in the company or its future as a major player in the life insurance business.

I actually think it’s quite smart. Why spend millions launching your own programme when clearly discovery and momentum have cornered the market and built up sizable books of wellness clients. Out of the box thinking….!

Liberty vindictively want to mess with the market perceptions on the vitality name, as it is this health offering and later insurance offerings that hurt them the most over the last 15 years.

Liberty’s out of the box thinking is simply amazing.

Agree. (Whether you were sarcastic or sincere!).

It is fine for Discovery to piggy-back on Parkrun infrastructure and an individual’s Parkrun-status, to give Discovery points (and probably on a whole host of other events/initiatives), but Liberty may not give Liberty points based on their clients’ Discovery Status?

So let’s get this straight, in the time it took Discovery to launch a bank, all Liberty could come up with is a copy-cat which relies solely on being a member of Vitality? A tale of two insurers: one that knows what innovation means, another that can’t help but piggyback off the best after two (three?) failed attempts at a rewards programme of its own. One need only look at the share price of the two to see where the talent is.

I disagree. Ons should not look at the share price. Discovery will probably be the next Steinhoff. Discovery uses extremely aggressive accounting practices compared to their peers (R31 billion new business related expenses not expensed, material changes to their actuarial assumptions, shiny new building testament to big ego not economics, CEO makes me think of Markus, etc). I am suprised that there hasn’t been a Viceroy report.

I do not fully understand the fight! Some companies do say that if you have proof of a written quote, you can than qualify for price match plus discount. The loser is the one who can’t price beat or match the winner is the customer.
Workwise also in the old days ,might still be happening-if you were a valuable employee and you were resigning with an offer, your company had an opportunity to match or beat the offer. The winner again was the employee you was able to get an increase or better negotiated working conditions like , extra day off in a week or working less hours.

I think I am with Liberty on this one, who is the owner of the information, Vitality or the customer?

I think Vitality forgot a small print to the customer about Not allowed to share the status information without approval by Vitality , and you can or will be prosecuted quote.

Discovery – get back in your box.

Any organisation can ask me any question – sex, age, alcohol consumption, last date of exercise, vitality status, who I bank with, what card I have etc ete etc

It is up to me the customer whether I want to divulge that information or not

Will be interesting to see how this plays out … will the other banks be offering value adds based on Vitality, short term insurers discounts due to driving behavior from Vitality diagnostics, etc. etc. etc.

Last desperate attempt at salvage before the Liberty ship sinks for good.

This is huge for Discovery if Liberty gets their way it may pave the way for other insurers.

Go for it Liberty! Take on this pyramid scheme!

There is one big thing that CONSUMERS DONT UNDERSTAND when it comes to these insurers, THEY OWN YOU AND YOUR CHOICES!

This bull##$ facade that its all about financial wellness!

While I’m a Discovery client, we’re in a love/hate relationship. This is quite clever from Liberty!

Discovery Vitality is in the wellness-program business, by CONTROLLING PEOPLE’S BEHAVIOR (spending patterns) for their own corporate benefit.

Utterly ridiculous and disgraceful from Liberty. After years of knocking the Vitality model they now piggy-back on the the innovation and hard work of that model to attract new business – ‘ healthier’ business at that. Their current risk pool and own client base clearly not to their liking.. maybe there is something to this incentivisation of healthy behaviour after all hey!

Desperate indeed.

I am no Discovery acolyte either but anyone who thinks this is ok does not understand basic ethics.

Wow. “Discovery” and “basic ethics” in the same sentence.

You’re a closet Discovery broker…arent you!

You’re a closet Liberty broker…aren’t you!

I think Discovery is being ridiculous and is grasping at strings with their declining share price.

With Liberty mentioning Vitality I think it actually encourages customers to possibly add on the vitality benefits to their Discovery plans to get further discount on Liberty’s products. Therefore, enhancing the value of Vitality for Discovery and not taking it away.

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